AB 5 Restricting Independent Contractor Classification Is Now Operative

AB 5 Restricting Independent Contractor Classification Is Now Operative

The California Legislature's highly publicized law, known as AB 5—which strengthened the restrictions for classification of workers as independent contractors—took effect on January 1, 2020. Under AB 5, all workers of a customer business are considered employees for Labor Code and Unemployment Insurance Code purposes unless the customer business satisfies either a three-part A-B-C test for independent contractor status or a statutory exception within AB 5. Though the entertainment industry was not the primary target of the legislation, there is no industry-wide exclusion; thus, AB 5 is potentially applicable, absent a statutory exception, such as the business-to-business exception. For further information, read our AB 5 industry client alert. Clients should consult their legal advisors for any specific potential impacts of AB 5 on their business.